Feds confident pot supply adequate

W I N N I P E G • The federal government is confident there will be enough marijuana to pass around despite concerns of a looming supply shortage as the nation rolls out legal sales next week.

Canada is “well positioned” to supply cannabis as the country transitions to a legal market on Oct. 17, with 66 licensed producers given the go-ahead to sell marijuana, said Mathieu Filion, a spokesman for Health Minister Ginette Petitpas Taylor.

More than 160 expansions or modifications of existing facilities have been approved since June 2017 and the government estimates the nation’s licensed growers have in excess of 11 million square feet of space as of the end of June, including space for cultivation and office space and storage.

“Based on current inventory levels and growth in production capacity, the industry is well positioned to supply product as consumers transition to the legal market,” Filion said Tuesday in an email.

The government’s response comes amid worries about Canada’s readiness for legal pot.

Only a handful of retail locations will be up and running on the first day of legal recreational sales, including one in British Columbia and none in Ontario.

British Columbia and Nova Scotia expect to receive fewer supplies than ordered from licensed producers amid lower crop yields and insufficient supplies of packing materials.

“It will be a fairly thin market to begin with and maybe that’s why a lot of these provinces haven’t rushed to get retail locations and bricks and mortar for day one,” said PI Financial analyst Jason Zandberg. “I would expect there to be long waits and very limited product types.”

The limited store openings and pot supplies may hamper sales at the outset, curbing enthusiasm for pot stocks that have soared in anticipation of Canada becoming the first Group of Seven nation to legalize marijuana. Canada’s market is expected to soar to $4.3 billion in the first year, according to Deloitte, with global demand poised to juice sales further as more countries follow Canada’s lead.

The supply of legal pot in Canada will only meet 30 per cent to 60 per cent of demand after legalization, according to a study by the University of Waterloo and the C.D. Howe Institute.

“There just isn’t that much product that’s going to be available day one,” said Zandberg.

The government has provided time for federallyregulated producers to harvest, package and ship cannabis products to authorized distributors and retailers, Filion said. Federal, provincial and territorial governments have each taken “significant” steps toward ensuring that there is an “orderly transition,” he said.